Investment Costs
Employee & Productivity Data
2.0 hrs

Financial Impact Analysis (First Year)

Return on Investment (ROI)
288.5%
Net Annual Profit
$31,731
Gross Annual Savings
$42,731
Payback Period
1.7 Months

This calculator helps you measure how much return you’re getting from investments in productivity improvements, such as new software, automation, or staff training.

Formula

ROI (%) = (Productivity Gain − Investment Cost) ÷ Investment Cost × 100

Example

Inputs

  • Investment Cost: $20,000
  • Productivity Gain (time saved, reduced labor, more output): $50,000

Calculation

  • Net Gain = $50,000 − $20,000 = $30,000
  • ROI = (30,000 ÷ 20,000) × 100 = 150%

That means every $1 spent returned $2.50 in value.

Steps to Estimate Productivity Gain

  • Convert time saved (hours) × average hourly wage into dollar value.
  • Add revenue from increased output.
  • Include cost reductions (e.g., fewer errors, lower overtime).

Tips

  • Be realistic: estimate actual adoption rate of the new tool or training.
  • Review ROI after 6–12 months to check if gains are sustained.
  • Compare ROI of multiple solutions before making a purchase decision.

Limitations

  • Productivity ROI depends on accurate time tracking and wage data.
  • Some benefits are indirect (employee morale, reduced stress) and hard to measure.
  • Short-term ROI may look low, but long-term ROI can improve significantly.

Frequently Asked Questions

What counts as productivity gain?

It includes labor cost savings, time saved, higher output, or reduced overtime expenses.

How do I measure time savings?

Track how many hours are saved per week and multiply by the average hourly wage or labor cost.

Is a 100% ROI good?

Yes. A 100% ROI means you doubled your investment. What’s considered “good” depends on your industry benchmarks.

Can ROI improve over time?

Yes. Once employees adapt to the new tool or system, productivity usually increases, raising long-term ROI.